Walk into a grocery store today and there are seemingly endless shelves of product to choose from. But behind all those different options are a handful of agricultural giants that have grown to dominate the food industry. Companies like Walmart and Cargill are well-known at this point, but there are also dominant players in everything from berries to dairy to pig farming. In this episode, we speak with Austin Frerick, an antitrust and agricultural expert. His new book, Barons: Money, Power, and the Corruption of America's Food Industry, details the behemoths behind American agriculture and how they got so big. He talks about the choices that went into our current agricultural system, the impact of all that concentration, and what can be done to change it.
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Hello and welcome to another episode of the All Thoughts Podcast. I'm Tracy Alloway and I'm Joe. Wasn't thal Joe? You know what I'm excited about.
This could go anywhere, so I'm not gonna guess, just tell me.
So we're recording this on March nineteenth. It is the first official day of spring. Oh, and that means that soon it will be berry time, specifically strawberries.
I think many parents are talking about these days. But the berry budget that parents.
When you said that, I was like smart, people are talking about strawberry.
Oh, seriously, Like many this is like a persistent gripe among parents, like how much we have to pay for our kids freshberry habit. Strawberries, blueberries, blackberries, raspberries. They're really expensive and kids just devour them.
And kids these days are spoiled. When I was growing up, I had fruit roll ups, which I don't even think you could classify as a fruit product. And all these kids have organic, freshly grown blueberries.
Crazy.
So when I was a kid, like, yeah, we had like apples and in this summer we had stone fruits, you know, peaches and stuff and then like grapefruit, and that was it.
So where do you buy your strawberries from or other berries?
Actually, before I answer that question, I want to say one other thing about my childhood no that I may be relevant to this conversation, which is that my grandmother in Michigan, her husband, her second husband, she lived when I was growing up on a farm in Elegant, Michigan. It had dairy, it had cows and stuff, but I also had like all these orchards and stuff. They're peaches and cherries and apple and it was just like wonderful and we had a great time as kids, and we'd gone to the orchard, so I did actually have a lot of fresh fruit. And I haven't been there in many years. But my understanding, I believe that farm is gone and now it's just entirely like soy or some brand, like all of those orchards are gone and it's just like one sort of like efficient unicrop farm these days.
It's a microcosm of America's agricultural evolution. All right, Wait, but you didn't answer the question where do you get your strawberries and blueberries and things from?
I don't know, probably Trader Joe's usually I think, I don't know, Maybe I don't know, Yeah, probably usual, probably usually Trader Joe's.
Can you remember the brand?
It's that one. I don't remember the name, but it's that one very brand.
It's almost one hundred percent certain to be DRIs Calls.
Yeah, that's right, and I specifically associate them with strawberries.
But yes, so I think if you go into almost any grocery store in America, you are likely to find DRIs Skulls berries of one sort or another. And the crazy thing about Driscolls is, for me, they're pretty much synonymous with berries. I think berries, you think Driscolls. There's a brand there. However, they don't actually grow any of their own berries.
I did not know that. That's really interesting, and it really is weird that there's like a brand that's the berry brand. You say that, and it hadn't really clicked to me that there is like the berry company in America. But yeah, there's the berry company in America's Driscolls.
All right, So, as excited as I am about berries this year, and in the interests of equalizing corporate America, I am growing my own berries supply in Connecticut. So I will achieve berries interests. That's right, But I think it's sort of emblematic of a few themes that have come up on the show in one way or another. Number one is the decisions that have gone into creating America's agricultural landscape as it exists today. So you just mentioned the farm in Michigan, Your old family farm used to have fruit orchard, used to grow a variety of different things, and now grows a single unicrop, probably soy or something like that. We've spoken about this at various times on the podcast, so it keeps coming up. The other big theme has to be antitrust and the concentration of power in a few specific areas. So how did it come to be that Driscolls dominates the berry market? We have to ask these questions.
I can't wait to find out the answer because I really like up. Like I said, up until you sort of said that, it just had never occurred to me that, oh, yeah, there's just this one company that I associate with berries.
You will never be able to escape Driscolls ever. Again. It will be in your mind every time you see a little plastic package of blueberries.
Every time we go to the grocery, store and my kids want twenty dollars worth a freshberries.
Actually, I should just say we do, in fact have the perfect guests to discuss all this today, and after reading their book, I have come away with a completely different idea of agriculture that I cannot unsee in many ways. And it's kind of depressing because I do walk into grocery stores now and I start muttering to myself about the illusion of choice and dairy Chekhov's and things like that. So I'm going to try to make everyone else more like me. You can't escape it. We're going to be speaking with Austin Frerick. He's the author of a new book it's coming out this month, Barns Money, Power and the Corruption of America's food industry. He's also an all round agricultural and antitrust expert and a fellow of the Thurman Arnold Project over at Yale University. So, Austin, thank you so much for coming on all thoughts.
Thank you for having me on. This is such a professional hunter. My husband and I are big fans. We've been big fans since September episode.
Oh, thank you. I appreciate that. Let me just say, to begin with now you've been so positive, I'm just going to reiterate what a depressing read this was. Why did you decide to write a book on this topic?
Honestly, this whole book started in a bar conversation in De Moine, Iowa. It was twenty eighteen, and it was a big governor's race in the state of Iowa. And Iowa doesn't have campaign contributional limits for state level races, and this political operative over a cheap draft Beers was telling me how this hog farmer donate is the largest donor in Iowa, donated three hundred thousand dollars to the governor's reelection campaign. And he was also telling me how they have a private jet. They fly back and forth between the only gated community in suburban Des Moines to Naples, Florida, and supposedly on this jet where their words and pigs fly, which to me, in my head part of it was, oh, this is good copy. But also this is such a powerful symbol of what happened to Iowa. What is going on when the most politically powerful person in the state is hog Baron. So I originally wrote an article for Vox with my buddy Charlie and then after we published the articles telling this bigger story of how did power consolidate in the hog industry in my lifetime, I realized, oh, this story can be repeated through the food system. This isn't unique to hogs. And then also this Robert Baron framework, to me, is a fun narrative device to tell these bigger, structural type stories.
So I mentioned in the intro that I had this idyllic childhood of like running through the farm that my grandmother was living on and picking cherries and eating them right off the tree. And there were tart cherries and red cherries and the golden ones that are multicolored that were my favorite. And now that farm is gone and it's just probably like one crop as far as the eye could see. I take it that it was not just my grandmother's farm. No, I mean, this is the story of the American agricultural system. And what's to me the whole time, what I was thinking in my head when you're telling that story was I kept thinking of a retirement portfolio. M your grandma had a diversified portfolio, different crops going on at once. And what happens now is the system's incredibly fragile because most farms are only one or two crops. Can I just say something, Tracy is a personal regret. So my grandmother's husband, Jack, farmer Jack, if you were alive today, I would be so excited to talk to him, and I just think about, you know, ask him a million questions about like how does dairy work? And how do you get an agreement to get your He also made cider, how do you get your sight or on the shelves. It makes me very sad that, like when I was, you know, eleven, I didn't know that I would be interested in all these topics. I never really talked to him about.
This is a very good reminder listeners to ask your relatives all the information that you want to hear about before it's too late. My aunt was quite senior at Countrywide, and she always promised to give me the inside scoop on what was going on pre two thousand and eight, and then she very sadly died early on of cancer. So yes, okay, we all have those regrets. Back to agriculture, that was a slight diversion. How concentrated is the US agricultural or food product landscape?
Oh?
To me it's one of the most concentrated spaces. It's a combination of a few things. I mean, you can't look at a hog market the same way with like a search engine, because you're not going to take a hog from Iowa and go butcher in North Carolina because of shipping cost. But you also have this whole dynamic of delusion of choice, like you mentioned earlier. I mentioned this briefly in my book, But there's like a peanut butter monopoly. Essentially one company has like roughly a fifty to sixty percent market share. But first of all, most consumers don't see that because they own different price points, because that rich consumer wants to think they're getting different peanut butter than the low income consumer. But on top of it, they tended to most store brands and you only find that out usually through recalls.
So yes, okay, there's a highly concentrated food supply in America, and many aspects of the food industry in America are highly concentrated with a few dominant companies. And we'll get into like what some of these companies are and the distribution and the growing or the slaughtering, whether we're talking about meat on the other hand, outside of the inflation that's hit a lot of categories in the world over the last few years, we also live in a world of caloric abundance, and that seems pretty good and in the grand scheme of history, like meat is very cheap, and many people can afford burgers, and many people can afford steak, and many people can afford fresh berries, which really we never had as a kid at all, or very rarely, like I don't remember my parents even, you know, buying berries. So could you make an argument It certainly seems to me like maybe there are some cost and concentration of power issues, but we're in an era of food abundance.
So just a few things on that. The first is, actually, per capita, Americans spend more food than Italians, so we actually we pain more and more for our food. This is even before the inflation stuffy according to USDA data. But that's also come at the expensive workers. I mean, that is like the hidden undercurrent. Sure of you can get cheap berries year around, because you have twelve year olds picking berries for other twelve year olds in developing countries. I mean, there's been reporting how basically any produce that's labor intensive with these trade agreements in America has moved offshore and kind of like a T shirt, it's so hard for journalists, especially the state of American media, to go investigate that the plant these farms are basically modern day plantations. And I would also last point on that is the obesity crisis in America. That undercurrent is We've never in the history of mankind had the lower classes be the overweight classes. And that to me is because the way the food system is designed, and I really get at this, my grain baron is you have to have money to beat healthy in America now because the food system picks favorites right now will be heavily subsidized processed foods.
Yeah, I can't remember. You actually had a stat in your book specifically about this, and it was the price of fresh fruits and vegetables has gone up a certain amount since I think it was from nineteen eighty, whereas the price of processed foods has gone down quite a lot.
So each baron's really built around an idea. And to me, my grain baron, which is Cargill, is about the farm bill. And to me, what I realize is, oh, this whole structure is designed to overproduce grains at the expense of everything else, and so in the constants it's crowding out everything. So like your family farm is, it's cheaper for people to plow up the orchards and put in corn than it does actually grow produce.
What do you walk us through this specific You hear people vilify the farm bill a lot. What do you walker through some of the specifics of like what are the sort of policy underpinnings of the farm bill and what it does?
Oh man, Joe, this honestly, this reminds me of the tax code. The farm bill has all these interlocking parts. Okay, that took me a while. They really get my head around. So to start off with, the farm bill comes from the New Deal, and that's from the dust bowl. These markets are over supplied and you had massive environmental damage because of people are pushing their land, engaging really destructive practices. So this New Deal farmwork was really centered in supply management, is what they call it. Sure, you can get subsidies, but you have to take land out of production. Most famously created all these reserves, grain reserves, cheese reserves, what have you. The government is trying to figure out the sweet spot for agriculture for production. What you slowly see happen, especially in the nineteen a's on is that framework kind of collapses to you're heavily subsidizing overproducing things. And it's kind of done three different ways. Think of it like a three legged stool. It's crop insurance, which like sixty percent of the premiums on crop insurance is subsidized by the government. You have the commodity programs, which it used to be to get a check like a subsidy check. Now it's kind of done through like a loan forgiveness. And then you also have the conservation programs. To me, like the grains are the big ones here, and then also like the caps have been raised, and also like even in crop insurance there's no cap and how much crop insurance you can get. So it's really pushing you to do this kind of model up production.
So talk about how that model of production, in those decisions that were made through things like the Farm Bill, how that led to dominance in particular in the grain industry. And I think your example in the book was Cargil.
Yeah, Cargil to me is a fascinating company. I did not originally include this when I started mapping out this book. It's the largest private company in America. They're bigger than the Koch brothers.
It's amazing.
Yeah, they do, like a think in my I think I one fourth of the world's grade trade. They're the middleman though, like I compare them my book to the closest thing we have in modern to modern day standard oil. But even at the end of that chapter, to me, they're more like the nineteenth century British Empire because the sun never sets on the grain Empire. So the original farm Bill actually to pay for it was a tax on processors companies like Cargill. So the family hated the original farm Bill. They fought it. They didn't like FDR because what the farm bill is doing the original one is limiting production. To me, it's politically brilliant to study because they use middleman. They don't usually engage in their political lobbying straight up. They give money to other groups to do their bidding. But you kind of uncovering the research is, Oh, they want to remove this because they just want to keep They just want tons of grain. And so what Cargill does has been doing slowly is buying up different parts of the supply chain, so you know they'll do like animal feed was a big part of Cargil, and then they got into meatpacking and then now that's just kind of their logic.
So how does that actually feed into the antitrust discussion Because on the one hand, if a huge company like Cargill is buying up other businesses, you would expect regulators to be looking at that. But on the other hand, if Cargil is saying, well, we're not necessarily getting more grain producers, we're getting something that's adjacent to producing grain. We're doing grain transportation or storage or something like that, and there are synergies involved, and the American consumer is going to benefit through lower prices. How do those conversations or debates play out.
Yeah, So, I mean I start with two fundamental notions of no company buys another company for pro competitive reasons. The goal of a corporate executive, and it's such a simple thing that I realized a few years ago, is monopoly. So you have that fundamental tension in markets where markets competitive markets are roofless, it's hard. Your goal is monopoly. So you're trying to get to a monopoly status. And so what you see with Cargill is they made a lot of these purchases thirty forty years ago before the Robert Bork anti trust framework took hold, that WO had not probably been approved. I can't remember off tom I head, but there's quite a few. I mentioned the book of large Acquisitions they made.
You mentioned the magic word just then, which is Robert Bork and full disclosure. I had not realized what a influential figure Bork was in the world of anti trust. And I find it so interesting reading that chapter to compare and contrast the sort of Bork interpretation of anti trust versus what we think about today. And I'm trying to do this without mentioning hipster antitrust, but there is more of a I guess, a throwback today to the idea of, well, is this particular corporate action good for Americans in the sense of labor, not just prices? Whereas Bork basically argued that regulators and the courts should ignore harm to workers and focus purely on consumer prices. So the consumer welfare standard, which seems kind of nuts in retrospect.
Yeah, I mean, what's so funny about that? Is number one kind of the undercurrent of this era are so much of the language it's designed to keep people out. These words don't really mean anything. So consumer Welfare Standard has like thirty different ductions by different people. Those words are really hollow, but they sound smart. Two, it tries to reduce this stuff to simple math equations when really like this is about power and who has it. These are moral questions that we're trying to mask with pseudo science. And for me personally, it was a coffee I had with Commissioner con back in twenty fifteen that really got me going on this. I was at the time a Treasury tax economist and I had written a paper on the growth of super rents, which is just like econ speak for monopoly level of profits into tax code. And I was like, huh, what's going on here? Why am I seeing a lot in agriculture, you know, anyone should able to make pop our chips. And read an article she wrote in like twenty twelve on like chicken monopolies. She was a journalist before she became a lawyer, and I was like, oh, this really explains what I see going on. Back in Iowa met with her and she kind of is the one who showed me, oh, there's this whole There's been this fierce intellectual debate in America over how we conceptualize power and kind of tell me that Bork history, And to me is, I mean, there's a lot of talk on big tech, but to me, the my book is really to like overlay that framework to agriculture in the food system.
So I take your point about, Okay, a handful of extremely powerful companies have like come to have this dominant position within the agricultural system. On the other hand, it seems like this is a partly and you're applied, not unique to agriculture, which is just that we have seen the rise across many industries of like you know, megga behemoth global we used to call them like in the nineties, like multinational corporations. They're also like economies of scale are a real thing. I believe, you know, like how much of this is like a policy decision versus a sort of more like natural evolution of how many businesses have evolved of like companies figuring out scale and efficiencies. And I have to imagine that setting aside policy that whether we're talking about slaughtering hogs or whether we're talking about growing corn that you could save money and selled it at a cheaper price if you're a big company that has access to a lot of capacity.
To me, it's a combination of both. I mean, the undercurrent of this book too is a lot of these companies got big not through organic growth, but through acquisitions that probably would not have been approved before. To me, the undercurrent two of this book is the whole negative externalities of this market power is just I mean, I think to me, as an Iowan, how I fell a part in my lifetime. It's the best farmland in the world. It should be the Italy of North America. Yet Iowa was now is basically an extraction colony. Like sixty seventy percent of the waterways highway you can't go into.
This is because the hog runoff. To put it politely, Yeah, so Iowa has about twenty five million hawks.
Hog defecates like three times more than a human being. So we're talking about the manure of the population of seventy five million people. Like Texas and California combined, that regulatory system because of my hog Baron's capture of the state government has been gutted. Keep in mind eye. I was also number one in chicken eggs. A lot of cattle. Like all this other maneuvers, they have too much maneuver for the environment. On top of it, you have this animals used to get their feet on land. You know, cows walk around, eat grass. They would fertilize their own feed. Now, because we basically stuffed most animals into these metal sheds, we have to use a lot of fossil fuelds to grow their feed. So you also have all that chemicals entering the water supply system too. And to add another layer to it is most farmland in Iowa's not owned by iwands anymore. Grammar Grapa dye kids moved to California. They put it into a trust. They rent out the land and you can always clock it when you're driving because they farm right up to the creek. So all those chemicals go right into the creek, including the manure. So what they do with these lagoons is they drain them. That they put these massive manure lagoons next to the buildings. Every few months, they drained the manure and they put it into the soil and they'll do in the winter, which is just awful. It's kind of illegal, but no one enforces that roll in Iowa. So you'll just see snow fields covered in snow with manure on it, and then just as you know, as the snow melts, it just go straight into the water system.
What were this civic Iowa regulatory changes? If the story is okay, domess local political power, what were the actual regulatory changes that enabled this?
The big one was the stripping of local control. This was back in nineteen ninety six. Secretary of Vilsack Biden, Secretary of Agriculture, actually voted in favor of this when he was a state senator. This whole thing too. I mean, you got an open revolt in Iowa. I mean, this wasn't just efficiency took hold. It was people are fighting tooth and nail.
I mean, and no one wants to live next to a manure lagoon.
That is like, it smells awful. I mean I can barely smell. When you get near one of these things, it's awful, and your home value collapses. Ten percent of these pigs and these facilities die, so next to everyone is a big dumpster fall bloated dead pig bodies. So you vultures but on top of it, just from a regulatory standpoint, if you treat pig manure like human manure, this model collapses. It's not efficient. It's efficient if you ignore all the negative externalities on top of it's just cruel. I mean, I'm not That's the other thing too, is like pigs are very social creatures, are smart, and you're putting two thousand of them into these metal sheds. And even the I with the open secret is if you build it below twenty five hundred pigs, so they'll say it's four hundred ninety nine, it's a different regulatory structure. But the open secret is they put four thousand in them. No one's checking this.
Yeah, I mean this was one of the incredibly sad themes running through your entire book. Joe doesn't care about animals. Joe, if I had.
To thought of the thought of four thousand pigs in a metal cage that's designed for twenty five hundred pigs disturbs me.
Let me put that on that never see the light of day. Yes, Joe's worst personality flaw, if I had to choose one, is that when I when I show him a picture of acute animal, he doesn't care at all.
Good for me.
That's actually a that's a compliment show. That's the worst thing I can think. Okay, So there is that incredibly sad aspect running throughout the book. There's also you know, you mentioned the manure problem. One of the things I was really interested to read in the book is that often these big companies are rewarded for coming up with solutions to problems that they essentially create. And I can't remember the specific name of the cow one.
I want to Farros Farms and fair Life.
Yes, yes, can you talk a little bit about that, like how companies are basically, you know, rewarded for doing this.
Oh, that's such a it's almost it's so comical, it's so bad. So the big thing, any agricultures, like our second largest contributor to climate change, and especially with beef and dairy are driving it along with the fossil fuels used in food grain production. So dairy, this is getting in the weeds. But you know, normally used to be pastured family dairy farmers. You know they have sixty seventy cows. The cow defecates and you know, creates the fertilizer for its feet when you put them into a metal shed, they pull the manure. Well, when that manure breaks down in a pooled environment, it creates methane gas that's not produced when it's on land, and so you have all this additional, you know, climate change contributing gas being produced in this production model.
So if the cows are in a field somewhere pooping the normal way, that manure would end up on grass and it would break down and there wouldn't be a lot of methane generated just from that process.
Can go okay. So not only so when you put them inside you create this methane, this additional methane. You're also using philesip fuels to grow their feet inside. So what the industry is trying to do is create some these manure biogesters are called. You basically pool the manure and you try to capture the gas coming the methane gas coming off it. It takes an immense amount of subsidy, and that is USDA is big one of the big there're big solutions to climate change right now, is spending a ton of money on this. The problem with that is you're incentivizing a really destructive model. The dairy industry is fascinating to me. It's one of the most complex commodities in my opinion. The joke in the dairy world is only five people understand that the dairy system, and four of them are dead, but are Milk consumption is going down, but our dairy consumptions going up because we're eating more cheese and ice cream. Those aren't healthy things, and we're producing more. And we're also doing in regions that environmentally cannot sustain it, the Texas Panhandle in New Mexico. Like my favorite little cocktail chatter is that Mexico Dairy does three times more dairy than Vermont. And so you have this system, this is being sold as a solution to a problem it created itself that didn't exist before. And that to me is like, I mean, they're trying to put ethyl on the airplanes.
Now.
I thought that the conversation ethanol's over. But that's a sort of the modern agricultural system is we have all this money sloshing around, kind of corrupting an honest conversation.
In your life and maybe even within the span of time that you've got interested in this specific subject that wrote the book, have you sensed a change in the politics of food because I feel like when I was a kid, that being anti factory farming as it was called, animal welfare, multinational corporations, many of these things I would have primarily associated with liberals or the left. And I get the impression that these days that actually, like the sort of debasing of the food system, the poisoning of the food system, et cetera, is actually migrating a little bit, and that you see more of this talk on the right. There's even something you've written about, which is that I think it was in like the nineteen ninety six primary, Pat Buchanan making a lot of hay, so to speak, by talking about thank you, not intentional changes in hog production, but that the dominant strain among mainstream Republicans was like pretty like safely on the side of the big business. Can you talk a little bit about that political evolution?
Yeah, I mean that to me is like one of the most hopeful things about this the food system right now is the chance for a bipartisan reform movement. I mean a lot of the ideas in the book started in articles I wrote in An American Conservative. I mean that I was very intentional on that, but I mean I think a few things are contributing to that. Number One. I feel like when most Americans go abroad now, one of the first things you always hear from them is food is better and cheaper abroad.
And I lost while I was traveling on Italian post that Yeah, yeah, that.
And then also like the undercurrent two for a lot of these parents, I mean, especially in meat packing, they're not American companies the meat industry, these are state backed monopolies. I mean, they're they're intentional development strategies of like in the beef packing, my sladering Baron is a JBS. First of all, they became a monopoly through bribery. They admitted to it, and the fact that we let them keep their monopoly status is kind of incredible. But that was an intentional development strategy by the country of Brazil to have a dominant player. And so that's why, I mean, the beef farmers right now have just been an uproar the last few years because I mean, they're if I could include one graph of my book would be on what you're paying in the store for beef and what ranchers are getting. It is diverged so much.
The margins basically yes.
Say more on the So basically the family farm has died in dairy and hog production, beef is the last one standing. And you have you know, these animals are huge, you can't ship them far. So even though you know three companies might have let's say eighty percent market sure when you're in Montana, you really don'tly only have one or two packers. And so what they're trying to do right now, besides only having one or two options, is they're trying to kill the spot market, which in my head I compared to eBay. They want production contracts, and so you're having this combination of the US cattle herd is at the lows since nineteen fifties, and part of that's because of the drought and the Great Plains. But also, and this is where I think is super fascinating is GPS has it has production, it's slaughterers animals and all the beef production regions of the world Australia, Brazil and America, and so it just kind of shuffles based on currencies that beef you're seen in the store, So farmers are they just don't have a lot of buying power right now. The other thing too, with beef is they haven't quite figured out the industrial production model with it.
They're starting to industrial production model of beef. Sounds delicious, No, no dystopian, thank you too. So there are a number of moments in this book that are disturbing in various ways. And one of the moments where I kind of gasped audibly had to do with the dairy industry and the checkof system. And a lot of people will never have heard of checkofs, but they will have heard of advertising campaigns like got Milk. So could you maybe explain what those are and how they tie into I guess the structural decision to over produce certain commodities and then you have to figure out ways to ramp up consumption.
Yeah. No, I'm so glad you asked about checkofs because it's one of those things where I was so determined to put them in my book, but it's so hard to explain it to people. So checkofs go back to the nineteen thirties. They come out of Florida. It was basically these tiny little things of flora orange juice way to advertise a commodity. They were a little tax on producers. They rarely started ramping up in the nineteen eighties, as is what I call the Wall Street farm belt to cold. Where As them were over producing a few things, how do we stimulate demand became the goal of a check off, so farmers. I tell the story how farmers could vote to create one and they create one. There's a whole different conversation over farmers could vote in one, but the USDA won't allow it, and I kind of tell that story with hogs. They threw out the vote in the late nineties. But so you have this, most of them are kind of small. There's like twenty or thirty check offs Christmas Tree check off, popcorn check off there mostly so the.
Christmas tree farmers basically got together and they say we're gonna, you know, pool like a certain amount of money, and that money is going to go to promoting Christmas trees and getting people to buy more.
Yes, but dairy's a different one. Dairy we're talking about a six hundred million dollar annual budget, so you're taking at tax and dairy farmers and it was, you know, got milk is the famous thing. But they real My conversations with people is that didn't stimulate demand, or it didn't really work. So what I argue has happened is instead of trying to do advertisement, it's moved to financing junk science. A lot of this science over these minor digesters is being financed by these check offs, by the dairy chuck off. To me, it's filling the void as we privatize our colleges, universities of America, especially the land grants and all the country. The check off dollars have filled that void. And so that to means why the agricultural markets that partly have gotten so concentrated, is you have this whole pot of money collectively eight hundred billion dollars we don't even know, by the way, because USDA is atrocious that keeping track of it. There's tons of government accountability reports getting on them to do something. They don't do anything. But it's revolving door. So a lot of USDA officials go work at a check off, they come back. Secretary of Villsac did that. So between administrations, his job was he was an dairy export lobbyist. So his job was Canada has a supply management dairy system, so his job was basically gut it so we could dump our surplus cheese into their markets. But that me is such a key thing. So my dairy baron, I tell the story of how he actually first financed a lawsuit to in the check off because what he realized what happened with hogs in Iowa was he needs to have a branded thing or else he's going to die like the hog farmers. He tested out in Texas at the grocery store, hab like a bougie milk product, and he was upset, Why finance my competitor, this generic milk product, So he financed lawsuit Dennet and basically I tell the story of how he seemingly made peace with the check off and he was able to use some checkoff dollars to finance not only you know, these manure digesters, but also this branded drink he helped create called fair Life. If you got any GM in America, young men love it because it's super high protein content. If you got a plant fitness, it's just full of kids drinking that stuff.
Something to replace celsium.
Yeah, that sounds good. Yeah, that's that's my first thought. I was like, Oh, I'm going to try when tomorrow when I go to the gym. You mentioned that so much of the land in Iowa is not owned by Iowa anymore. You know, Like I said, I was born in Michigan. I lived for many years in Illinois, but I didn't want to stay in the Midwest. I wanted to come to New York City and be a professional podcaster. And I get like sentimentally, like I said, Oh, my idyllic family farm in Alligated in Michigan, it was so beautiful in the berries. But like, ultimately, like I didn't want to stay. You know, I never aspired to be a farmer. Like, how much of this is just like structural changes in people's preferences that are just sort of maybe even much bigger than food. And yeah, you know, we remember fondly these small farms, but the next generation doesn't want to stick around.
I mean, that's a really key point to remember. And that's something I mean, I wrote this book over five years. Yeah, and the beauty of doing that is you write a little bit, you walk away, and we romanticize a Glorian pass a lot. Yeah. I don't want to go back to that new deal supply management system because in the day, I'm at the point now we junk the farm bill, take that money it's too corrupted put into conservation programs because every farmland is different. The way you do farmland connecticuts different than Hawaii than Iowa. Also, the growth of robotics in agriculture has been really underappreciated. You go to a farm show. Now, these things drive themselves. I mean they cost like six hundred thousand dollars and they're gonna happen before cars. So like most there's a very good chance that most Roe crops are going to be robotics very very soon. But to me, animals is the key thing here. I really want to put animals back on the land because the whole thing too to keep in mind is this model makes pretty bad tasting food. When I was writing this book, I was doing a little like I would do a milk tasting.
This is how you get those steak officionados on board by saying you'll have more abundant, good quality meat by fixing the system.
Oh like my wedding. My husband and I got married in Iowa, and I was insistent we had pastor meat and dairy. My mom's on a tow alve Irish Catholic, you know, tales all this time, and we serve pork, and the amount of people in my Iowa family is like, this is the best tasting pork. Was just like we kept hearing that, and it's just like, oh, you're used to like when animal sands inside the metal shuttle that needs corn from a ceiling, it's not going to taste as good as animal that does piggy things.
So you mentioned scrapping the farmvillage just then what can be done at this point too, I guess reverse some of the structural decisions that have gone into producing America's agricultural system as it is now.
Yeah, So one of the things that gives me hope is the movement to evs, electric vehicles and cars. It's going to kill ethanol. I think ethanol has been one of the most destructive things happened to the Middlewest. It actually pushed a lot of cattle farmers out, but you know, pushed them off their land. Instead of having cattle and pasture, they put in corn. And also, the thing to keep in mind is the single largest use of cornhouse ethanol. And that transition is going to happen fast. When it happens, and so how do we kind of start pivoting? So as you know, ethanol dies that we slowly phase out these industrial animal facilities, but animals back on the land. It's a good jobs program, you know, for rural America, because there's only so many animals one person can do. I think using school meals is a really good procurement way to like drive the supply chain. Like who does who doesn't want Wisconsin kids even drinking pasture milk? You know, stuff like that. And then what started this whole conversation over berries is that model of berry production is rooted in sharecropping and just ban that, like you can't.
Explain more what is the specific berry model?
So the berry model actually comes out chicken. I didn't even when I started writing this tournament. It's a tournament's system. So when the meat regulations were written in a century ago and response to the junkle and all that stuff, chicken wasn't written to the regulations, okay, because there wasn't. You didn't buy chickens at the store. You just had on in the backyard and you killed it. So this model comes out of the South. Where have you guys to find the trend system before I know? Or we need a new US? Yes, okay, so they call it the Southern model. If you're a chicken farmer in America, you don't actually own your bird. You're given the bird by the company, the feed toll it feed to use whatever. You basically babysit the bird. You then sell, you give it back to the company. They weigh it. You're paid on tournament systems. Whoever adds the most weights gets paid the most. So if Joe, you're not behaving badly, if I don't really like you as some company, I give you the run of litter, you get paid the lease. You know you're not making that much money. Also, you have a ton of debt. These stats are a little old, but it's like seventy percent chicken farmers on America live in poverty. And so you have this model take hold in the South with chicken production. And because of that, where you're shifting all the externalities and really abusing farmers in labor, chickens really cheap to produce, so it gains massive amount of market share in the protein markets. Well instead of us stay, instead of forcing chicken to behave like the other meats, what we see as a race to the bottom. Arding the eastern shore of North Carolina, the hog markets in the poor black areas starts doing this model. To me is the best example of structural racism in the food system is you have these poor black areas North Carolina full of these industrial hawk facilities, and because of the water table levels North Carolina, they can't and usually and I where they take them manure and they inject it into the field, and North Carolina they spray it in the air. You have all these stories of like you know, poor black churches having to repeat their steeples every few years or they're dry. You know, you can't do laundry outside, dry it out play. So this model then replicates across the food system, most notably the berries. And I tell this story how the Drisco brothers were They were smart to realize the rise of Walmart. Of Walmart wants one company to do four berries year round. So what they start doing is so most berries, berries are Strawberries are really fickle. Historically a lot of them are grown on the California.
Coast, So they grow them on the coast, and they realize that it's more efficient to have that sort of outsourced labor.
Right outsourced labor, Well, you have the cost of housing increasing in California. That's a very short growing window on the coast. Historically it would move up that I cannot remember if it moves up or down the coast, but it would. The production region was shifted from city to city for the berries. Well, they started moving production to like Morocco, to Baja California, to the point now where Driscoals grows berries on every single continent except Antarctica. But part of it is by moving off short there's less labor standards, there's less environmental standards. I spent a lot of time in the book talking about how a lot of berry production is in Baja California, in a region that is just as dry as Death Valley. They drained the aquifers, they and then they build a decalization plan on the ocean. A lot of these are indigenous workers, and no one really knows what goes on in these places. I mean, there's these you see stories here and there enough where it's like the tip of an iceberg where you see like I mean, there's a story in Reuters a few years ago how the gangs in Mexico gone to avocados. You just don't know what's going on when these supply chains get that long.
This is part of the bitcoin avocado correlation conspiracy that the reason that correlation exist or used to exist because it's broken down, has something to do with financing Mexican mafia.
I just have one last question. But since you brought up Walmart, and of course for years and even still, but for years, the sort of grocery store system in the US was famously fragmented. There really weren't any sort of dominant national chains. There were, you know, regional chains obviously, just sort of big picture like, what is the existence of this dominant nationwide grocery store, biggest grocery store company in America? What are the ripple effects in terms of you know, you mentioned berries, but in terms of creating concentration of power elsewhere across the food supply chain from the existence of this one powerful and seller.
Oh, the Walmart chapter, that might be my favorite chapter of the book. It's twice as long as any other chapter. I mean, I also just love grocery stores. Let me start there, okay, but I also never thought of Walmart as a grocery store when I started this book, even though sixty percent of its sales grocery. I love this little anecdote where Sam Walng got the idea from Walmart from a French company car for if it have been to Europe, you see these car wars everywhere he saw on vacations, like I'm gonna copy that because it gets you in the story. You need grocery to every few days Walmart. At the same time Walmart's starting to rise, you see this whole framework Robertson Patman at collapse, These basically competition protections in the system between suppliers and vendors like Walmart. And so as Walmart's market power gets bigger, it's able to basically squeeze its supplier more and more. And to me, this little nugget I found. I love reading trade press and like these little regional business publications. You find the best nuggets. In Northwest Arkansas, there's a business publication I spend a lot of time with and they report how Walmart has a rule with its vendors then you cannot get more than thirty percent of your sales from Walmart, which I didn't understand at first. I had to ask around to the people in the grocery industry, why do they have that rule? And that's a supply chain risk management rule. Walmart knows is such a vult sure that it puts it more than thirty percent of your market. You know, sales come from Walmart. You're putting the company in the you know, into a fragile space at the same time too, So that really puts a lot of power in Walmart's hands. I kind of compare it to like supply and command. My husband rejected this idea, but I really want to kind of frame this around like the closest thing we've ever had to like an American Paula Burero, He's gonna laugh when he hears that. But the Walmart family, their power is just I mean, they're the richest family in the world. And this whole chapter's framed around Walmart and Amazon had been in this epic battle centered in grocery the last few years, and I kind of came away thinking Walmart's winning, and think about the Walmart To keep in mind is Jeff Bezos only owns like ten percent of Amazon. The Walmart family owns majority of Walmart. I mean, they've been selling some shares lately. I think it dipped finally below fifty percent. But Walmart's goal is like, when Walmart comes to town, you don't buy more milk, you just shift your production. So Walmart has this gold basically capture every dollar of America is under class. You know, they're putting these banks inside Walmart's, They're putting these healthcare clinics inside Walmart's. But they're also making vertical plays into the food system. They just announced two weeks ago that they're building their third dairy plant in Texas. They're making a big beef operation in the plains. And from my conversations with people is Walmart was so kind of fed up with being gouged by the other barons that it made these is making these vertical plays, so it has an insight in the cough structure. So that way when it bargains with companies and knows like no, no, no, don't don't toy us around.
Yeah, tired of barons, so it became a baron and baron Joe, you and I went to Bentonville in Arkansas, and you definitely get a sense of Walmart's power in that particular town. Austin, that was so interesting and fascinating. Thank you so much for coming on all lots and listing your barons behind America's agricultural concentration. Thank you so much, Thank you for having me on.
Jo.
I want to ask if you enjoyed that conversation, but that doesn't seem like the right question. Let me ask, are you as are you going to be walking into grocery stores muttering about antitrust and concentration and the illusion of choice like I am Now.
Maybe I think probably to some extent, I'm definitely going to pay more.
You're gonna be dancing down the aisles going this steak is on sale.
Well, so my takeaway from this conversation is that a lot of it is really about values. We can have a calorically abundant, hyper efficient food supply chain where maybe it's not the best tasting meat, but a lot of people can afford steak and hamburger meat and even fresh berries on a way that may not have been the case twenty thirty or forty years ago. But there are clearly environmental externalities. Someone is going to pay the cost, and there are big structural changes to society in the sense that do we want a handful of companies, say owning a huge swath of the land in Iowa or Michigan or elsewhere, Like, these are pretty legitimate debates to be having, and what is the optimal trade off and what is the optimal mix. So I do think there is a lot of fertile ground for figuring out, like, well, where do we want to like calibrate that dial.
I think that's a totally fair way of putting it. Absolutely, it's a value judgment about what kind of system you want to see. I do think there is a tendency, not just with agriculture, but we talk about this all the time in finance, this idea that you kind of think certain things are inevitable, like the existence of money markets or euro dollars, that those kind of just happened, but of course they were the product of conscious decisions and there were reasons to do them. Same thing with agriculture. Something like the farm bill might have made sense when it was first proposed, maybe it doesn't make as much sense now. One thing I think about now, though, is I guess the experience of the past few years of inflation, so much of which was in food prices, and I can kind of see, on the one hand, okay, maybe that leads us to reevaluate things like antitrust, So maybe people start to wake up to the idea that, oh, well, companies are pushing through price increases because there's not as much competition as there used to be. On the other hand, if we want to get really cynical about it, it seems like people just really hate high food price, yes, and so you could also see people going like, well, we want to make those prices even lower, So let's have more efficiencies, let's have bigger supermarkets, let's do less environmental protection because that's expensive. So it feels like it could go either way totally.
And you know, you mentioned, you know, or in the early part of the conversation, this gap between you know, fresh foods and fresh vegetables versus processed foods, and you know, on some level, it's not surprising, right Historically, I mean, if you went back a long time, there were like mass famines and food would cost infinite amount because the food did not exist. And so to some extent, we've reduced that volatility in the price of food by essentially reducing the amount that the end product is actually directly related to a food commodity at all. And so, you know, if you think about a Fredo there's some amount of corn in there, but mostly it's the process of an industrial process. But you don't have these big, you know, swings in the price of Freedo's the way you're going to have in swings in the price of corn, because it's the end product is only partially related to the commodity. There are some nice things about that, right Like, that is.
The most impassioned defense of Freedo's I've ever heard. It actually makes a lot of sense.
Right Like, it's like it's sort of like built in a built in price. But I do think a lot of these things, like I didn't want to, you know, stay in the Midwest. I was never really like there was no prospect of me ever, I don't think working on my grandmother's farm. But I think a lot of these like strike about like deep questions about our value, the values at a society. And I do think it's interesting that there is this sort of change, maybe a foot in the politics of food that is sort of maybe bipartisan or trampeological.
Well that's my big question, because you feel like a lot of the environmental concerns, like depending on how you couch them, could have bipartisan appeal. So you know, there are a lot of people in Republican states that enjoy going out to the great outdoors and presumably don't want to see a manure lagoon when they do that, and so you feel like it could have wider appeal, just depending on how it's sort of presented. But Joe, you should come visit my place in Connecticut. I've got I've invited me.
You probably have I have.
It's just hard to get out there. I've got fruit trees, okay, I've got raspberries great. I've got strawberries which we'll be ready in June. And uh, I'm planning blueberries right now.
Bring some in and I'll give it so I can give them to my kids and save some money.
I brought you tomatoes last year, but I'll bring us stropperlicious here. All right? Shall we leave it there?
Let's leave it there.
This has been another episode of the Odlots podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.
And I'm Jill Wisenthal. You can follow me at the Stalwart. Follow our guest Austin Ferrik. He's at Austin Frerek. Follow our producers Carmen Rodriguez at Carman Arman dash El Bennett at Dashbot and Kelbrooks at Kelbrooks. Thank you to our producer Moses Ondem. For more Oddlogs content, go to Bloomberg dot com slash odlots where we have transcripts of blog and a newsletter and you can chat about all of these topics in the discord twenty four to seven with fellow listeners Discord dot gg slash od loots.
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